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New research indicates salespeople are often elevated to management based too much on sales numbers and not enough on managerial abilities. (Shutterstock)

It’s not clear just how much Laurence J. Peter was joking in 1968 when he published The Peter Principle.

His evidence came from the “Hypothetical Case File” and was populated by employees right out of a children’s parable: Miss Oval, Mrs. Cylinder, Mr. Eclipse, Mr. Cube, Mr. Sphere and Mr. Tinker. This did not stop him from pontificating in sweeping terms and bold type.

“My analysis of hundreds of cases of occupational incompetence led me to formulate The Peter Principle:

In a Hierarchy Every Employee Tends to Rise to His Level of Incompetence.

Perhaps it was that Dr. Peter had a real doctorate or wrote a book unburdened by the ambiguity of real data. (The Peter Principle, he asserted, was “the key to an understanding of the whole structure of civilization.” He also said he was kidding.)

Or maybe it was that, as much as Dr. Peter meant the book as satire, it was all too often true.

An employee does well. He’s rewarded with a promotion. He does well in that job, and is promoted again. This continues until the point he is no longer performing at a level deserving of a promotion, which leaves him at a level where he is over-matched by the demands of the job - in other words, “incompetent.”

“Look around you where you work, and pick out the people who have reached their level of incompetence,” he wrote. “You will see that in every hierarchy the cream rises until it sours.” (Italics are his.)

The concept is funny; the reality, for those unfortunate enough to run into it, is not.

The book sold over one million copies and stayed on the bestseller lists in the United States for 33 weeks. It did not achieve that level of success strictly for its humor. Yet “principle” was too strong a word. Dr. Peter’s observation, although it had a certain amount of what researchers call “face validity,” was at best a theory.

Until now.

Three professors - Alan Benson of the University of Minnesota, Danielle Li of MIT and Kelly Shue of Yale - analyzed the performance of 53,035 sales employees at 214 American companies from 2005 to 2011. During that time, 1,531 of those sales reps were promoted to become sales managers.

“Consistent with the Peter Principle, we find that promotion decisions place more weight on current performance than would be justified if firms only tried to promote the best potential managers,” the researchers concluded. “The most productive worker is not always the best candidate for manager, and yet firms are significantly more likely to promote top frontline sales workers into managerial positions. As a result, the performance of a new manager’s subordinates declines relatively more after the managerial position is filled by someone who was a strong salesperson prior to promotion.”

A company that relies too heavily on sales as a criterion for promotion pays twice for the mistake. Removing a high-performing sales associate from the line potentially upsets her client relationships and puts the revenue of those accounts in jeopardy. The team newly under her direction is at greater risk of under-performing as she struggles in a role that demands quite different abilities. “These findings underscore the possibility that promoting based on lower-level job skills rather than managerial skills can be extremely costly,” the professors opined.

The starkness of the results took Dr. Benson by surprise. “I expected that the best salespeople would become merely-good managers: some skills translate to management and others don’t,” he said. “To see that the best salespeople were becoming the worst sales managers was surprising.”

Dr. Benson, Dr. Li and Dr. Shue can't say how often companies stumble into the Peter Principle and how often they deliberately live by it. Some firms may promote great salespeople “to encourage workers to exert effort in their current job roles and to maintain norms of fairness,” they speculated. Counting sales is easy compared to “other, more subjective or fungible employee characteristics in promotion decisions.” This new information, Dr. Benson said, “suggests firms were willing to lower the bar to promote the best salespeople.”

There are important cautions to a study such as this one.

First, what’s true in general is often not true in particular; many great salespeople have the wherewithal to become great managers. The evidence of that potential, however, is most likely not in their sales numbers.

Second, employees who had high numbers in collaborative selling rather than the common go-it-alone version had better-than-average chances of becoming effective managers. Perhaps top performers in areas less cut-throat than sales do not suffer from the Principle.

Third, and most important, the study examined the promotion-to-manager version of the Peter Principle. It did not test whether people top out when asked to perform increasingly complex stages of the same disciplines for which they were first hired. The sales reps in the study, to quote one successful sales manager, were “promoted not to the level of their incompetence, but rather out of the area of their competence.” There’s no reason to believe that with enough coaching and instruction, an employee can’t become increasingly proficient in his or her specialty. The promotion-within-specialty version of the Peter Principle remains just a theory.

Yet for anyone who wants to be methodical about his or her leadership of a company or managing the trajectory of his or her career, it strikes me that the new research carries a number of important implications. Let me suggest a few:

Being an incredible “individual contributor” needs to carry more prestige. The professors hypothesized that top salespeople are often promoted because the “non-pecuniary rewards are also likely to favor managers, who typically enjoy greater prestige, opportunities for career progression inside and outside the firm, benefits, job security, pay security, and better work conditions than their subordinates.” The outsized attention to leaders not only doesn’t need to exist, it doesn’t in fields such as medicine, publishing, professional athletics and the film industry.

You may want to avoid getting promoted. One of the greatest pieces of self-awareness is the knowledge that management, whatever its perks, might not be worth the burdens it will impose on you. “I’ve learned that I am a rockstar individual contributor because I am very strong on execution and strategic thinking,” one successful “individual contributor” wrote to me. "I’ve also had roles where I’ve managed teams. I wouldn’t say I was unsuccessful at it (i.e. incompetent). But I will say it completely sapped my energy and enthusiasm for work that I loved. . . . I was never the best in that role and I couldn’t do it with any kind of longevity.”

If you’re a top sales rep newly promoted, get humble and collaborative fast. The new study gives compelling evidence the attributes that repeatedly got you the annual sales junket are not the ones that will lead your team to the top. If the sentence from the study “Prior sales performance negatively predicts managerial performance” doesn’t make you lose sleep, you haven’t stared at it long enough. But you may be able to beat the odds. Start by taking each member of your team to coffee and asking somewhere in the conversation, “How can I best support you in my new role?” Then write it down. Then do it.

Newly minted managers need help with the transition. Marketing, accounting, sales, architecture, writing, engineering and even “special warfare,” to name just a few, are each considered disciplines that require training and progressive experience. Leading and managing? It’s still too frequently considered a no-brainer for those who have mastered the function being managed. “No one ever prepared me for the responsibilities of being a manager” has been a common refrain for too long and at too great an expense.

If a top-selling colleague from your team just became your new boss, it might be time to move on. Maybe your new manager is the exception that proves the rule. Maybe he or she is collaborative, strategic, protective and unselfish. But the results of this new study indicate that hurting the sales of those not promoted is a price many companies are willing to pay to reward the top sellers. If that shoe fits, the only way to avoid taking one for the team is to resign.

If you report to a competent leader who reports up to other competent leaders, think twice about leaving. Dr. Peter wrote - perhaps jokingly, perhaps not - that he had “accepted the universality of incompetence.” It’s not that bad. But if you’ve found yourself led by genuine, inspirational people, keep in mind it’s a somewhat rare and fragile state not to be taken for granted.